Lots of bad news out there, today – US unemployment rate rose to 8.2%, Eurozone unemployment rose to 11% (ours is probably right there, too, but the Eurocrats haven’t, it seems, figured out how to fudge numbers as well as Obama’s Bureau of Labor Statistics has), a host of bad news out of China indicates a possible “hard landing” for that economy, which will take Australia and Canada (major commodity suppliers to China) down with it, what amounts to a bank run in Greece and the start of one in Spain…and, yesterday, I read an article which I hope was a bald-faced lie because it says the derivatives market (something I don’t fully understand but from what I can gather it is nothing but a bunch of ponzi scheme garbage) is leveraged to 10 times global GDP…and there’s simply nothing to back all that garbage up. So, are we doomed to a Depression?
The answer is “yes” and, also, “it started in 2008″. For you liberals out there, this will provide you a bit of comfort: Obama is not at fault for it. On the downside, though, just about everything he has done has ensured that it not only won’t get fixed, but will actually get worse. He hasn’t been alone in this, of course – Ben Bernanke at the Federal Reserve (as well as other central bankers around the world) has piled on the harm with all his money printing. The problems of the global economy are as follows:
The world uses fake money – money just printed up by central banks and backed by nothing. Fake money allows insolvent banks and governments to keep themselves afloat but it works out to the systematic stealing of the money of wealth-creators. If you work hard today and earn a dollar what will happen is a 100th of a penny of it will be stolen tomorrow…that 100th of a penny isn’t so bad, but after 10 years it works out to quite a lot of the dollar you earned. Fake money essentially allows failure to be masked – what is economically counter-productive can be kept going because you can keep passing fake money through it. That you are all the while eroding the entire economy does not show up for a while, but show up it will.
We allow governments to pile up debt. Government debt is not an “investment”. An investment is when you take some of your own money and provide it to someone else who has worked out a plan to generate more wealth than was put in to it. So, I have $100,000.00 and I see some guy in a garage with what I think will be a great product and I give the $100,000.00 to him to start up manufacturing – next year, the guy in a garage is a guy in a factory and he pays me back $125,000.00 while he, himself, is worth $250,000.00. Government spending can provide some useful things, of course, but even when it does it isn’t like that. A road facilitates commerce but it doesn’t actually return money on the money spent. If the government spends a billion dollars building a new road its not like the government will get 1.5 billion dollars back on it next year. True, the economic activity stimulated by the good road will result in a broader tax base but its still not an “I loan you money for your wealth-producing enterprise and I get paid back with interest while your wealth-producing enterprise just goes on and on making more and more wealth”. So, even in the best of circumstances (a needed road), government spending is not an investment; even less so is government spending an investment when it goes in to things like high paid bureaucrats, subsidies to favored groups, welfare, etc, etc, etc. It still might be something desired overall but it isn’t an investment.
Even worse, though, when the government spending is not out of current revenues but is borrowed against future revenues. When we spend tomorrow’s money today on government we are not only not investing but we are de-investing…because every cent borrowed by the government is a cent which can’t be borrowed by persons and enterprises in the private economy who would use that borrowing to create new or expanded sources of wealth creation. Whatever benefit you might get from such borrowing will be short lived, at best, and may actually harm the economy because the money borrowed by government is all too often to be wasted by the sundry sorts of graft common to government.
What started in 2008 and continues to this day – masked by a gigantic amount of fake money and government debt – is the logical and easily predicted outcome of a system which has at its bottom fake money and government debt. I’m only astounded that it has kept going as long as it has. Shows the power of people to blind themselves to reality – and our short-sightedness. We listen with amusement to tales of what prices used to be…never thinking for a moment that, hey, the reason prices used to be lower is that our money was worth more and what the heck happened to our money? It is when we create wealth that we get prosperous – when, that is, we make, mine and grow things. Nothing else does it. 10,000 law degrees, 100 government departments and bureaus and the next 50 social media sites – not a single bit of wealth being created. The next time a farmer plants a corn crop? Wealth created. The next time a miner digs in the earth? Wealth created. The next time someone makes a pair of pliers? Wealth created.
In order for this wealth creation to happen we mush have three things:
1. Investment money for wealth-creators to start up or expand their wealth creating enterprises.
2. Reliable money which holds its value over time so that investors can safely invest for long term wealth creation (fake money, on the other hand, moves investors to protect their wealth by looking for the highest rate of short term gain).
3. A tax and regulatory system which encourages money to flow in to wealth creating enterprises while laying the burden of proof for new regulations upon those who would impose them (not, as now, simply imposing them and then asking the victims to prove they aren’t necessary).
Investment money will primarily come from paying down government debt. We’ve got $15 trillion of potential investment money sitting in the form of US government bonds. Entirely wasted there – we need to balance our budget as swiftly as possible so that each year more and more of the $15 trillion becomes available to the private economy.
Reliable money would best come from returning to the gold standard but people have been so relentlessly propagandized against such currency that it would be a hard sell. Our best option, for now, is to require Congressional action for increasing the supply of money – whatever we do, don’t leave in the hands of central bankers to go “cntrl-p” whenever their Bankster buddies are in trouble.
As you can easily see, neither of those things can be fixed as long as liberals have any say in the matter, let alone any real efforts to tackle tax and regulatory reform. Essentially, fixing the problem requires a clean sweep of our liberal Democrats – though even if we did that we’d have no end of trouble from the RINOs. What needs to be done to fix things, after all, is the gutting of a politico-economic which the current beneficiaries don’t want to let go. A long, hard war is required – but we take each battle as it comes. The first one comes on November 6th – then we can start actually fixing our economy and emerging from the Depression.